Ryanair Holdings plc

Company Profile
Publication Date: 11 Jan 2008

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

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Ryanair Holdings plc

Company Overview

COMPANY OVERVIEW
Ryanair Holdings operates low fare scheduled passenger airline serving short haul, point to point routes between Ireland, the UK, and Continental Europe. It is headquartered in Dublin, Ireland and employs about 4,500 people. The company recorded revenues of E2,236.9 million during the fiscal year ended March 2007, an increase of 32.2% over 2006. The operating profit of the company was E471.7 million during fiscal year 2007, an increase of 25.8% over 2006. The net profit was E435.6 million in fiscal year 2007, an increase of 42% over 2006.

KEY FACTS
Head Office Ryanair Holdings plc Dublin Airport Dublin IRL 353 1 812 1212 353 1 812 1213 http://www.ryanair.ie

Phone Fax Web Address

Revenue / turnover 2,236.8 (EUR Mn) Financial Year End Irish Stock Exchange Ticker NASDAQ Stock Exchange Ticker March RYA RYAAY

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SWOT Analysis

SWOT ANALYSIS
Ryanair Holdings (Ryanair) is Europe's leading low-fare scheduled passenger airline. The company operates short-haul, point-to-point routes between Ireland, the UK and Continental Europe. The company's leading market position provides the company with the ability to leverage its market position to further expand its operating network. However, a likely rise in crude oil prices could result in higher operating costs of the company, which would impact the company's margins. Strengths Leading low cost airline Strong revenue growth Business strategy Opportunities Launch of new routes Fleet expansion Global airline market Weaknesses Weakening employee relations Lack of scale

Threats Increasing aviation fuel prices Threats to security EU regulations on denied boarding compensation

Strengths

Leading low cost airline Ryanair Holdings (Ryanair) is Europe's leading low-fare scheduled passenger airline. The company operates short-haul, point-to-point routes between Ireland, the UK and Continental Europe. Ryanair operates 487 low fare routes across Europe carrying approximately 42.5 million passengers a year across 25 European countries. The company is considered to have the largest airline user, almost monopoly at both Dublin and Stansted airports. Ryanair is considered to be the airline with the best punctuality and highest frequency, as compared to its major competitors like Lufthansa, Air France, SAS, Aer Lingus, easyJet and British Airways. The company was ranked as the worlds largest international airline by International Air Transport Association (IATA) in March 2007. A strong market position provides Ryanair with brand recognition, and further expands its operating network. Strong revenue growth Ryanair has been reporting strong revenue growth. The company reported revenues of E2,236.9 million during the fiscal year ended March 2007, an increase of 32.2% over 2006. The increase was

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SWOT Analysis

primarily attributable to an increase in passenger volumes. The company's revenues increased at a CAGR of 29.1% during 2003-2007. Additionally, Ryanair's five year average revenue growth of 29.1% is higher than the industry average of 12%. The company's strong consistent revenue growth provides its operations with financial stability and the ability to fund expansion strategies. Business strategy Ryanair has an extremely strong business strategy, which is focused on its objective to firmly establish itself as Europe's leading low-fares scheduled passenger airline. The company offers low fares designed to stimulate demand, particularly from fare conscious leisure and business travelers. Ryanair sells seats on a one-way basis, and sets fares on the basis of the demand for particular flights. The company favors secondary airports, as they are generally less congested than major airports and can be expected to provide higher rates of on-time departures. By choosing secondary airports, the company can thus achieve faster turnaround times and fewer terminal delays and gain competitive handling costs. The strategy has enabled the company to have a better 'on time' performance record, than its bigger competitors (including Lufthansa, Air France, easyJet and British Airways). Ryanair's 'on time' performance record for calendar year 2006 was 85%, exceeding that of its principal competitors, including Air France (80%), easyJet (73%), and British Airways (70%). Faster turnaround times are a key element in Ryanair's efforts to maximize aircraft utilization. In addition, Ryanair enters into agreements with third party contractors to handle passenger and aircraft handling, ticketing and other services. The company fixes its contracts on competitive terms by negotiating multi-year contracts, at prices that are fixed or subject only to periodic increases linked to inflation. Ryanair's strong business strategy enables the company to synchronize its operational strategies in accordance with the market requirements, thereby enabling the company to maintain a cost effective business strategy.

Weaknesses

Weakening employee relations Ryanair has been involved in a number of labor union disputes. In 2006, Ryanair workers in Girona airport went on a series of one-day strikes called by the Spanish CCOO trade union to protest about the working conditions of Ryanair ground staff in Spanish airports. The company was yet again faced with a potential strike action called by Walloon Government employed security staff at Brussels Charleroi airport in December 2006. Though the strike was called off, it resulted in cancelling and reinstating flights. The failure to maintain good employee relations could result in a halt in its operations and cause significant monetary loss for the company. Lack of scale

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SWOT Analysis

The company is small in size compared to its competitors. Many of its competitors, such as Air France, Lufthansa and British Airways are larger in size and enjoy a competitive advantage in accessing financial, technical and human resources. Air France, which primarily operates in Europe and North Africa, offers industrial maintenance and other air-transport-related services, including catering and charter services and generated $ 31,595.9 million revenues during fiscal 2007. Lufthansa generated $27,176.3 million revenues and British Airways generated $17,212.8 million revenues during the same year. In addition, these competitors are able to absorb raw material price hikes better than Ryanair holdings, which generated revenues of around $3,062.6 million during 2007. Therefore, the weak revenues of the company as compared to its peers indicate the lack of scale and weaker market position of the company.

Opportunities

Launch of new routes During fiscal 2007, the company announced 153 new routes and extended its operations to three new countries, adding destinations in Marseille, Madrid and Bremen. It also started 16 new routes across Europe and its 19th base in Dusseldorf in February 2007. Following this the company had announced 13 new routes in July 2007 that will start in October 2007 from its Bristol, East Midlands, Liverpool and Glasgow bases, and three new routes from Belfast City Airport. Most recently, Ryanair announced six new routes from Dublin and two new routes from Bremen to Alicante and Palma de Mallorca in August 2007. Expanding its operations to new countries would help in reducing the company's dependence on the UK-Ireland market. Launch of new routes is expected to drive the top line growth of the company. Fleet expansion Ryanair entered into an agreement with Boeing in 2005 to purchase 70 new Boeing 737-800 series aircrafts over a five year period from 2006 to 2011 and acquired additional option to purchase up to an additional 70 such aircrafts. The new Boeing 737-800s are the most technologically advanced airplane in the single isle market. The new plane is outfitted with the latest entertainment system and safety systems (including autoland capability and traffic collision avoidance systems). The enlarged fleet would allow the company to support the existing capacity on existing routes and expand its network capacity to open new routes. Global airline market The global airline market primarily comprising of passenger transportation witnessed stronger growth during 2001-2005. This industry generated total revenues of $318.6 billion in 2005, representing a compound annual growth rate (CAGR) of 2.6% for the five-year period spanning 2001-2005. Further,

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SWOT Analysis

it is estimated to reach a value of $475.3 billion by 2010, an increase of 49.2% compared to 2005. The passenger volume is also estimated to reach 3,270 million in 2010, from the passenger volume of 2,489.7 million in 2005, representing a growth rate of 31.3%. Moreover, the demand for low cost airlines is growing. Ticket price is the number one criterion for most passengers when selecting a flight, well ahead of the availability of a non-stop service. In view of this growing trend, the company is planning to expand its global fleet size and could be in a position to benefit from the growing airline industry.

Threats

Increasing aviation fuel prices Due to the rising oil prices globally, the prices of aviation fuel have gone up substantially in the past few years. The average cost of a gallon of commercial jet fuel in the Rotterdam has more than doubled since 2001, from $0.77 per-gallon in January 2001 to $2.07 per-gallon in June 2007. Also, the Air Transport Association (ATA) averaged the jet fuel cost as $70 per barrel or $1.67 per gallon in 2006, a 90% increase from 2001. As a result of increased aviation fuel prices, the companys fuel cost increased by 50% to E693.3 million in fiscal 2007 over 2006. The rising fuel prices are likely to have a direct impact on the companys margins since price volatility in fuel costs may cause an increase in operating expenses of the company disproportionately to its sales volume Threats to security Security issues often pose a challenge to Ryanair. On August 10, 2006, UK security authorities arrested and subsequently charged eight individuals in connection with an alleged plot to attack an aircraft operating on transatlantic routes. As a result of these arrests, UK authorities immediately introduced increased security measures on all UK outbound flights, which resulted in all passengers being body searched, and banned the transportation in carry-on baggage of certain liquids and gels. The introduction of these measures led to passengers suffering severe delays while passing through these airport security checks. As a result, Ryanair cancelled 279 flights in the days immediately following the incident and refunded a total of E2.7 million in fares to approximately 40,000 passengers. In the days following the arrests, Ryanair also suffered reductions in bookings estimated to have resulted in a loss of an additional approximately E1.9 million in revenue. As in the past, the company reacted to these adverse events by initiating system-wide fare sales to stimulate demand for air travel. Future acts of terrorism or significant terrorist threats, particularly in London or other markets that are significant to Ryanair, could have a material adverse effect on the company's profitability or financial condition. EU regulations on denied boarding compensation

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SWOT Analysis

The European Union has passed legislation for compensating airline passengers who have been denied boarding on a flight for which they hold a valid ticket, that come into effect from February 2005. The legislation also imposes fixed levels of compensation to passengers for cancelled flights, except where the airline can prove that such cancellation is caused by extraordinary circumstances, such as weather, air-traffic control delays or safety issues. As Ryanair's average flight duration is less than 1,500 km and therefore considered a short-haul flight, the amount payable would therefore generally be E250 per passenger, per occurrence. Passengers subject to long delays (in excess of two hours for short haul flights) would also be entitled to assistance including meals, drinks and telephone calls, as well as hotel accommodation if the delay extends overnight. In addition for delays, over five hours, the airline would be required to reimburse the cost of the ticket or provide rerouting to the passenger's final destination. Ryanair does not currently offer any such compensation or other benefits to its passengers as part of its low-fares service. The imposition of the regulation would significantly increase the expenses incurred by the company and affect its profitability.

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